Buyers in China, the world’s largest buyer of distillers’ dried grains (DDGS), are trying to cancel U.S. shipments to avoid possible fees if an investigation finds U.S. suppliers were dumping the goods below cost, traders said.

Buyers are trying to cancel shipments beginning in March, when they expect an initial conclusion from China’s commerce ministry that may levy additional anti-dumping tariffs following an investigation that began in late December.

“Many are trying to cancel shipments. They anticipated that the commerce ministry may take measures from March,” said one industry source.

One major Chinese buyer has been trying to cancel a bulk cargo, which normally carries between 30,000 tons to 50,000 tons of DDGS, said the source.

DDGS, a by-product of corn-based ethanol production, has found a ready market in China, where growing demand for meat has fuelled a boom in animal feed production. Chinese feed mills have used DDGS as a substitute for corn and meal.

The U.S. Grains Council, which has promoted DDGS use in China for years, said China’s investigation could be disruptive to trade.

U.S exports to China skyrocketed from almost nothing three years ago to more than 2.9 million tonnes in the first 11 months of 2010, which were largely carried via containers.

“Many more buyers intend to cancel, which we think is quite normal given the current situation,” said one Shanghai-based trader, adding that China’s imports this year have already fallen following the rise of U.S. corn prices. (Reuters)